Denny's Looks to Assure Continuity After 30-Unit Operator Files Bankruptcy, Plus Checkers and Outback Operators File Chapter 11

“There are viable restaurants in this group, and franchise partners within our system are willing to step in to help secure their future,” Denny's Chief Development Officer Mark Burgess said in a statement. Photo credit: Adriana-stock.adobe.com

Once a large multi-brand franchisee, EYM this week again filed for bankruptcy, this time for its Denny’s division.

EYM Diner of DFW and EYM Diner of Florida filed for Chapter 11 bankruptcy protection in the Northern District of Texas November 4, citing between $10 million and $50 million in liabilities, per court documents. Its assets total less than $50,000. The company operates 30 Denny’s restaurants.

EYM is led by Eduardo Diaz, and the Denny’s bankruptcy is the latest of many since 2024. EYM’s Pizza Hut and Panera Bread affiliates also filed for Chapter 11. It closed all of its Burger King and KFC restaurants in 2023 and 2024.

EYM Diner’s largest debt is to Interbank for $18.4 million. It also owes more than $2.7 million to the Internal Revenue Service, according to the filing.

Diaz and his attorney did not immediately respond to a request for comment.

Denny’s is working with EYM to ensure continuity throughout the bankruptcy process, Denny’s Chief Development Officer Mark Burgess said in a statement.

“There are viable restaurants in this group, and franchise partners within our system are willing to step in to help secure their future,” Burgess said. “We are working with those partners and other creditors through the necessary processes to transition operations of as many impacted restaurants as possible to experienced operators in our system.”

Denny's as a system is struggling, with a 2.8 percent sales decrease systemwide in 2025. It ended the year with less than $2.9 billion in sales with 1,376 restaurants.

Denny's completed a take-private sale transaction with TriArtisan Capital, Yadav Enterprises and Treville Capital Group earlier this year.

It’s been a tumultuous couple of years for EYM.

In July 2024, EYM Pizza declared bankruptcy. The operator at the time had 142 Pizza Hut locations. It closed more than five dozen restaurants and sold 77 stores to six buyers for about $12 million. Pizza Hut bought 18 stores in Georgia, South Carolina, Wisconsin and Illinois for $720,000. Aditya Pannu of PZH Foods paid $5.7 million for 21 restaurants in three states and Neil Patel of NRP and Kenny Patel of KK MGMT paid $3.9 million for 20 Pizza Huts in Illinois.

Pizza Hut stated EYM’s actions damaged its brand and sought legal intervention to revoke its franchise rights. EYM sued the franchisor in March 2024 to keep the franchisor from terminating its franchise agreements, but a judge dismissed the complaint in April. Pizza Hut sued the franchisee that summer—about a month before the bankruptcy filing—for not paying royalties on time.

Between 2023 and 2024, EYM Chicken closed all of its KFCs, totaling about four dozen.

EYM King closed 26 Burger King stores it operated in Michigan in 2023 after Burger King sued the franchisee for failing to pay royalties.

In 2025, EYM Cafe filed for Chapter 11 bankruptcy following a lawsuit from franchisor Panera. The suit alleged EYM breached its franchise agreement several times by not making payments to vendors, landlords or the franchisor. Panera claimed it terminated EYM Cafe’s franchise agreements, but the franchisee allegedly continued to operate its locations.

Outback to buy restaurants from bankrupt franchisee

EYM isn’t the only sizable franchisee that filed for bankruptcy this week. Cerca Trova Restaurant Group Holdings, a San Diego-based Outback Steakhouse franchise operator, filed for bankruptcy in Delaware, citing traffic declines and struggles related to the COVID-19 pandemic.

The franchisor intends to purchase 61 restaurants from Cerca Trova’s affiliate, Out West Restaurant Group, for $26.3 million, according to court documents. The operator closed more than a dozen restaurants this year.

“This is an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity," a representative of Outback's parent company, Bloomin' Brands, said in a statement. "Bloomin’ Brands is participating in the process as a stalking‑horse bidder to acquire Out West’s assets and seeking to support operational continuity and protect the brand while the court‑supervised process moves forward.”

Outback is the stalking horse bidder, and there’s opportunity for other buyers to make a bid for all or some of the franchisee’s assets. The sale must be approved by the court.

Cerca Trova listed up to $50,000 in assets and between $100 million and $500 million in debts, according to its bankruptcy filing.

Thomas Shannon started Cerca Trova in 1994 as T-Bird Restaurant Group to open Outback franchises in California. In 2015, an HIG Capital affiliate acquired the franchisee. In 2017, Cerca Trova bought 45 Outback units in Nevada, New Mexico, Colorado and Arizona and had the exclusive rights to develop in those states, according to the bankruptcy declaration.

By 2019, the group was the largest Outback franchisee in the system, with 99 units and more than $340 million in annual sales, court documents state.

To help mitigate the impacts of the pandemic, the franchisor waived $5.7 million in fees and deferred $18.1 million “of additional obligations,” according to the declaration. Even as sales were up again in 2021 and 2022, Cerca Trova couldn’t pay back its loans when they matured.

Checkers 'zee enters Chapter 11

Global Midsouth Holding Corp., a Checkers & Rallys franchisee, filed for Chapter 11 bankruptcy protection in Tennessee October 28. It filed a day before a foreclosure auction for one of its stores in Jackson, Tennessee. The bankruptcy halts the foreclosure proceedings.

It listed $1.3 million in debts and $1.9 million in assets, according to the court filing.

An affiliate, Global Midsouth Corp., filed for bankruptcy in July.